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CHAPTER 4

CHAPTER 4. PRODUCT RANGE PLANNING AND SELECTION. LEARNING OBJECTIVES. Identify the dimensions of a retailer’s assortment plan, including variety, depth, availability and price level Understand the internal and external factors that will influence the assortment

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CHAPTER 4

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  1. CHAPTER 4 PRODUCT RANGE PLANNING AND SELECTION

  2. LEARNING OBJECTIVES • Identify the dimensions of a retailer’s assortment plan, including variety, depth, availability and price level • Understand the internal and external factors that will influence the assortment • Understand the criteria used for product selection and appreciate the attention to detail required in the process. • Understand the relationship between products and consumers and how this can influence product selection • Explore the product assortment monitoring and review process

  3. THE PRODUCT RANGE / ASSORTMENT • Used to refer to total retail offer or a sub-set of products (e.g. category, department, section) • Described by two key dimensions • WIDTH (variety of different types of product) • DEPTH (choice within a product type, e.g. brand, product variation and price levels)

  4. MANAGING PRODUCT GROUPS • By product similarity • e.g. Yoghurts • By end use • e.g. according to DIY project • By price • e.g. budget range, premium range • By brand • e.g. designer name • Important Concept: Core and non-core

  5. THE ASSORTMENT PLAN • Also known as MODEL STOCK LIST • A planning aid that starts in the buying office and ends up in the store • A list of product types that are planned to be stocked at a particular time • Shows the variables that will be offered, but does not necessarily show product items • Ensures the product range offers customer appropriate level of choice

  6. ASSORTMENT PLAN CONSIDERATIONS • Store size, store characteristics and fixturing availability • Complementary merchandise (balance) • Profitability of merchandise • Corporate objectives (e.g. stock availability service Vs. exclusivity) • Feedback from store personnel • Disciplined or opportunistic range development

  7. PRODUCTS AND CONSUMERS • Consumers have different types of needs and motivations for shopping • Consumer trends will affect the product category life cycle • Product managers, particularly buyers must track consumer trends and purchasing patterns, influenced by • demographics • consumer economics • social trends • Product managers must also be aware of • technological trends • legal requirements

  8. NEW PRODUCT DEVELOPMENT • Essential to keep customers interested and inspired in a competitive market • Resource hungry, with high failure rates • Retailers who have a highly developed own-brand strategy usually have facilities for in-house product innovation • fashion design studio • development kitchen • research and development labs • graphics departments (packaging) • Innovative suppliers can gain competitive advantage

  9. THE PRODUCT SELECTION PROCESS • Getting each product in its totality ‘right’ in terms of type and quality • Consideration of a product in minute, qualitative detail e.g. components, ingredient, branding, packaging • Ensuring each product criterion contributes to the product’s ability to satisfy consumer needs, • Usually the job of the buyer, or category manager

  10. PRODUCT SELECTION CRITERIA • Physical properties • Packaging • aesthetics, protection, function, brand identity, promotion, added value • Style • aesthetic blending of shape, colour and materials, related to fashion and taste, abstract • Utility • function, maintenance, durability, versatility, health, safety and environmental issues • Product Quality

  11. QUALITY ASSURANCE • International product standards • Ethical and environmental assurance • Quality Assurance Systems to maintain consistent quality level • Quality Control to halt the progress of faulty products • Adoption of Quality Management Standard (ISO 9000)

  12. PRODUCT SPECIFICATION • Provides a link between buyer’s product negotiations with supplier and deliveries • Describes in detail what the product is and comprises (e.g. dimensions, components, production methods) • May include a blueprint and/or ‘sealed’ prototype • Becomes the standard for production and quality checking

  13. PRODUCT BRANDS • A brand is an intangible product feature • A brand can be the only attribute that counts for the consumer • Represents a quality guarantee • Manufacturer’s brands usually represent quality and expertise • Retailer brands (own brands, private label) have traditionally been low price variants, but now more complex • Endorsement of products is an important variation within the branding theme

  14. RETAILER BRAND STRATEGY • Managing the brand portfolio is at the heart of many retailers’ product strategy • Retailer brands bring control, improved profits, and the opportunity to target specific customer groups • Retailer brands can have different objectives: • exclusive brands • own brands / house brands • own label • retailer sub-brand • Manufacturer brands can bring: • prestige and positive consumer associations • product development and marketing support

  15. PRICE / VALUE AS A PRODUCT FEATURE • The price of a product is subject to different value perceptions and interpretations of individual customers • Setting prices involves • an appreciation of what represents value to consumers • reaching retailer’s financial objectives (e.g.target margins or profit contributions) • See chapter 12

  16. MONITORING THE PRODUCT RANGE • Continuous sales monitoring via EPOS reports • reports tailored to needs of different types of retail managers • Integrated information management: • reporting on performance (e.g. sales and profits) in relation to resource input (e.g. space) • Range reviews • formal, in depth analysis of product assortment performance on a regular basis

  17. THE RANGE REVIEW • Insert Figure 4.2

  18. TRACKING PRODUCT / MARKET TRENDS • Formal or informal information gathering process • Consumer trend analysis • Product sector analysis • Catchment area analysis • Product range analysis

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